Disclaimer - By publishing this information on this Web site, the Boston, Massachusetts law firm of Altman & Altman LLP is not claiming to represent any clients or cases mentioned here. The content provided is designed to inform readers and is not intended as legal advice.

October 20, 2015

Are Apps Like Uber and Lyft Making Boston Cabbies Obsolete?

In Boston and Cambridge, taxi drivers must purchase a permit in order to legally operate as a taxi. These “medallions,” as they’re called, used to fetch a hefty price. In fact, as recently as 2014, some taxi drivers were paying nearly $700,000 for the privilege to pick up and transport customers. Many cabbies actually took out mortgages to finance the high cost of the medallions. The high price may come as a surprise, but up until recently it was well worth it. The permits exist in order to cap the amount of cabbies working in one particular city. The cap on medallions provided an opportunity for many cabbies to make serious money. But all that is changing.

As apps such as Uber and Lyft begin to dominate the ride-hailing industry, Boston’s taxi drivers are having trouble making payments on their mortgaged medallions. Banks have started foreclosing on delinquent loans, and Boston’s last four medallions sold were auctioned off at nearly half last year’s price.

According to a spokeswoman for the Boston Taxi Drivers Association, Donna Blythe-Shaw, this is just the beginning of an onslaught of foreclosure sales. “I’m surprised there’s not more,” said Blythe-Shaw. “They’re all drowning in these mortgages on these valueless medallions. They’re drowning and no one cares.”

This Year’s Medallions Selling for Half of Last Year’s Market Price

Voluntary sales of medallions have plummeted compared to last year. In the first quarter of this year, only 10 medallions were sold, and one of those was a foreclosure sale. Then the sales stagnated entirely until late August when another foreclosure was auctioned off for $310,000. Just last year, the average medallion sold for $666,547.

In addition to the inability of many cabbies to make mortgage payments on their medallions, their sudden loss of value is just pouring salt on the wound. Hundreds of cabbies are saddled with hefty mortgages on almost valueless medallions. And it seems to have happened almost overnight.

State lawmakers are discussing various methods to regulate the ride-hailing business while simultaneously stabilizing the taxi business. However, progress has been slow. A new bill from Gov. Charlie Baker seeks to allow companies like Uber and Lyft to operate with even more freedom and less oversight. On the other side of the spectrum, cabbies and some lawmakers would like to see the ride-hailing app drivers treated the same as cab drivers.

Uber Drivers Charged with Sexual Assault

Companies like Uber and Lyft have provided a convenient alternative for millions of customers as the demand for “here and now” service continues to grow. With the guarantee of a taxi “whenever you need it” becoming less secure, ride-hailing apps have been a welcome addition. However, these quick-growth conveniences do not come without challenges and, quite honestly, risks. Several Uber drivers have been charged with sexual assault. The stricter regulations surrounding taxi cabs may seem slightly less convenient at times, however, these regulations also apply to the safety and well-being of passengers. The process of purchasing costly medallions, and the restrictions that go with being a legal cab driver in the state of MA, make hailing a cab a statistically safer option than using a ride-hailing app.

Uber recently released data indicating it provided rides to more than 2 million people in Massachusetts in the month of September, most of them in and around Boston. There is no statewide data available for taxi passengers but in Boston for the entire year last year, 12.8 million riders took cabs, down more than 12 percent from the previous year.

Uber entered the Boston market in the fall of 2011. According to data from the hackney division, there were 13.1 million cab rides in the city in 2010, generating total revenue of more than $214 million. In 2011, cab revenues rose by more than 12 percent to nearly $240 million while the number of rides increased nearly 9 percent to 14.3 million. Both 2012 and 2013 continued to show increases, albeit much smaller, before both revenues and ridership plummeted in 2014. Revenues hit a peak of $257 million in 2013 before dropping nearly 7 percent to $240 million last year. The number of rides hit 14.5 million in 2013, but fell more than 12 percent to 12.8 million in 2014.

Altman & Altman, LLP – MA Personal Injury Attorneys

The lack of regulation surrounding companies like Uber and Lyft can result in dangerous situations for customers. If you have been the victim of an intoxicated, violent, or reckless Uber or Lyft driver, the attorneys at Altman & Altman, LLP can help. We have been protecting the rights of MA accident and injury victims for nearly 50 years, and we can help you. Contact Altman & Altman, LLP today for a free consultation about your case.

By publishing this information on this Web site, the Boston, Massachusetts law firm of Altman & Altman LLP is not claiming to represent any clients or cases mentioned here. The content provided is designed to inform readers and is not intended as legal advice.